Federal Appeals Court Concludes West Penn Allegheny Health System Adequately Alleged Antitrust Claims Against UPMC and Highmark

On November 29, 2010, the United States Court of Appeals for the Third Circuit ruled in favor of West Penn Allegheny Health System (“West Penn”) and against the University of Pittsburgh Medical Center (“UPMC”) and Highmark, Inc. (“Highmark”) in a significant antitrust matter that should be of interest to those in the health care industry and antitrust counsel.

West Penn, Pittsburgh’s second largest hospital system, alleged that Pittsburgh’s dominant health system, UPMC, conspired with Pittsburgh’s dominant insurer, Highmark, to protect each other from competition in their respective markets. The federal appeals court reversed a district court’s 2009 ruling that West Penn had failed to state antitrust claims.

This decision is important because Supreme Court rulings from the past decade have made it more difficult for a plaintiff to state an antitrust claim, and the panel’s unanimous ruling imposes some limitations on that trend by interpreting Supreme Court authority to require less than the district court had demanded. As a result, it portends a liberalization of pleading requirements that may permit antitrust claims to survive motions to dismiss.

In its ruling, the Third Circuit concluded West Penn had adequately alleged an agreement between UPMC and Highmark, anticompetitive effects in the relevant markets, and antitrust injury in the form of artificially depressed reimbursement rates.

For More Information

The health care industry has been a hotbed of antitrust activity and is expected to see even more antitrust litigation in light of health care reform. If you wish to discuss this issue or any other antitrust or unfair competition issue, please contact Joseph E. Wolfson at 610.205.6019, or the Stevens & Lee attorney with whom you regularly speak.

This News Alert has been prepared for informational purposes only and should not be construed as, and does not constitute, legal advice on any specific matter. For more information, please see the disclaimer.